Chemical Industry ETF surges 3.64%! Middle East situation provides a "divine assist," is the buying opportunity here?

Ask AI · How can the situation in the Middle East become a catalyst for the chemicals sector to rise?

Source: Wind; data as of April 7, 2026

Our reporter Li Pengfei Ye Qing, Beijing, reporting for chinatimes.net.cn

On April 7, the A-share chemicals sector showed exceptional strength. As of the close, the Huabao Chemicals ETF (516020.SH) rose 3.64%, closing at 0.94 yuan, with total trading value reaching 204 million yuan for the full day. Meanwhile, the basic chemicals sector saw a substantial inflow of main funds; the net inflow amount on the day exceeded 12 billion yuan, ranking first among 30 CITIC一级 industry categories.

Judging by the performance of constituent stocks, several individual stocks rose significantly. Hengyi Petrochemical and Shengquan Group both closed at the daily limit. Luxi Chemical and Hualu Hengsheng rose by more than 9%. Junzheng Group, Baofeng Energy, and others also led the gains. Overall, the chemicals sector delivered clear outperformance on the day.

Pure-chemicals theme ETFs surged by more than 3.5%

Looking at ETF subcategories by theme on the day, different theme-based chemicals ETFs displayed a clear split in performance. Pure-chemicals theme ETFs were the strongest. Among them, Huabao Chemicals ETF, Fullgoal Chemicals ETF (516120.SH), Penghua Chemicals ETF (159870.SZ), and Guotai Chemicals ETF (516220.SH) all posted gains of generally more than 3.5%. These products track the CSI Subdivision Chemicals Industry Theme Index, covering core areas such as basic chemicals, chemical raw materials, and fertilizers and pesticides.

Petrochemical industry ETFs were also strong. 华夏 Petrochemical ETF (159731.SZ) rose 3.54% on the day, placing it in roughly the same band as the pure-chemicals theme ETFs. This ETF mainly tracks the CSI Petrochemical Industry Index, covering sub-sectors such as oil and natural gas, refining and chemicals, and chemical fibers.

By contrast, ETFs related to new materials and new energy on the STAR Market saw relatively lower gains. Data show that Bohu STAR New Materials ETF (588010.SH), Nanfang STAR New Materials ETF (588160.SH), and Penghua STAR New Energy ETF (588830.SH) rose in the range of 0.75% to 1.25%. These ETFs mainly track companies on the STAR Market focusing on new materials and new-energy technologies, and there is a significant difference in their constituent-stock structures from traditional cyclical chemicals sectors.

In terms of trading activity, Huabao Chemicals ETF’s trading value exceeded 200 million yuan on the day, indicating a high level of attention from capital to the chemicals sub-sectors. A chemicals-industry analyst at a brokerage firm, in an interview with reporters from 华夏时报, said the sector’s strong performance on the day is related to multiple factors. He noted that from a fundamentals perspective, prices of some chemical products have recently shown signs of stabilizing and rebounding. Meanwhile, marginal improvement expectations in areas such as real estate, automobiles, and textiles are gradually being strengthened. At the same time, with the first-quarter earnings window approaching, market expectations for the profitability of some chemical leaders are relatively optimistic.

A sudden shift in the situation in the Middle East became a market catalyst

The sudden shift in the Middle East situation provided a catalyst for the rally. According to Iran’s Fars News Agency, an explosion occurred that day in the Jubail industrial zone in the northeastern part of Saudi Arabia, involving U.S. capital participation; it was reported as being hit by large-scale strikes. The Jubail industrial zone is one of the world’s important petrochemical production hubs. Its annual output is about 60 million tons of petrochemical products, accounting for roughly 6% to 8% of global total output. The zone hosts multiple large petrochemical enterprises and projects. Among them, Saudi Basic Industries Corporation is one of the major investors in the industrial zone. The Sadara project, which involves participation by U.S. Dow Chemical, as well as projects co-invested by Saudi Aramco and France’s TotalEnergies, are also located in the industrial zone.

Meanwhile, in a statement issued on April 6, the Israel Defense Forces said that it carried out airstrikes that day on a large petrochemical integrated facility in Iran’s southern Assaluyə area. The statement said the facility is Iran’s largest petrochemical complex. It stated that the Israeli side had struck Iran’s two major petrochemical complexes, causing severe damage to more than 85% of Iran’s petrochemical export capacity. Israel’s Defense Minister Katz said the attack dealt a major blow to the economic survivability of the Iranian regime.

Driven by the above geopolitical events, market concerns about the stability of petrochemical product supply chains have risen. The aforementioned chemicals-industry analyst told reporters that both the Jubail industrial zone and the Assaluyə area are key production locations for essential petrochemical products worldwide, involving multiple basic chemical feedstocks such as ethylene, polyethylene, and methanol. In the short term, the conflict may disrupt the export and transportation of some products. If the situation remains tense going forward, spot prices of chemical products in April and May are expected to strengthen further. The analyst also pointed out that with the drawdown of low-cost stockpiles in the Middle East, together with the ongoing decline in domestic chemicals inventory levels, support factors for chemical product prices are gradually being strengthened.

Is the chemicals investment window still open?

Multiple institutions have expressed optimistic views on the outlook for the chemicals sector. A chemicals researcher at a public fund told reporters from 华夏时报 that the chemicals industry is currently in the tail end of the expansion cycle. The “anti-involution” policy helps ease the industry’s long-standing low-price competition dilemma. Upgrades and renovations of old plants will further improve safety levels and energy-efficiency standards. The advantages of leading companies in technology, scale, and capital are expected to expand further, and industry concentration may continue to increase.

A senior industry practitioner believes that this round of Middle East conflict may trigger a permanent restructuring of global chemicals capacity. Europe, Japan and Korea, and Southeast Asia have chemicals capacity that is highly dependent on Middle East feedstocks. As fighting continues and feedstock supply is cut off, it is expected that more chemicals capacity will be forced to shut down. China’s chemicals industry, leveraging cost advantages in coal-to-chemicals and its end-to-end industrial-chain supporting capabilities, is expected to become a main fill for global chemicals supply gaps.

Wang Yujue, a fund manager in the equities department at Yinhe Fund, told reporters that the current situation in China’s chemicals industry is at the critical point between low profitability and a contraction in capital expenditure. Policy-wise, it is relatively favorable. Since the beginning of the year, most chemical products have issued public notices of price increases or plans to increase prices. Under normal circumstances, this year should have been a good time for chemicals investment, but since March, the Iran-U.S. conflict has disrupted the investment rhythm of the chemicals industry, and significant divergence has emerged across sub-sectors. Wang Yujue believes that although the trajectory of the war is hard to predict, from an investment perspective, it is still possible to find products that are less affected by oil prices, have strong improvement in earnings this year, and are at relatively low valuation levels. In short, the window for chemicals investment is still open.

China Merchants Securities pointed out that looking ahead to 2026, this round of chemicals capacity expansion is already near its end. Measures related to “anti-involution” are expected to catalyze a repair at the bottom of the industry’s profitability. At the same time, the new materials sector, benefiting from rapid downstream demand growth, may start a new round of high-growth cycle. In the short term, ongoing geopolitical conflicts continue to affect the supply and transportation of crude oil and some petrochemical products, increasing volatility. It is recommended to focus on large energy central enterprises, coal-to-chemicals leading firms with stable raw material supply and relatively low costs, and fine-chemicals leading firms with a better supply-demand landscape and smooth cost pass-through. In the medium to long term, the operating resilience of traditional chemicals leaders stands out. By laying out new materials and other areas, they can enhance their competitiveness against the trend. Against the backdrop of an improvement in industry sentiment, they are expected to deliver a double uplift in both performance and valuation.

责任编辑：麻晓超 主编：夏申茶